The success of democracy depends on the decentralization of power. Through this system of local self-government, people can obtain their democratic rights. Through this system, power can be properly decentralized and every individual can get the scope to develop his or her personality fully and properly. The local self-governmental institutions are the best centres for imparting democratic thoughts and education. People prefer democracy because they want to live in an environment of equality and liberty. Moreover, both the central and the state governments can make various administrative experiments through these local self-governments. It thus, enables the ordinary people to take part or make active participation in the lowest level of administration. Naturally, the political socialization of local people becomes possible. Moreover, the local self- government is conducive to equality and liberty and the perfect medium for satisfying the needs and grievances of the people at local and regional level. Panchayati Raj institutions are known by various names such as ‘Democratic Decentralization’, ‘Local Self-Government’, third tier of democracy or Grass Root Level Democracy’.